Why Is ICICI Bank Share Price Falling In Trade?

Shares of ICICI Bank have witnessed sharp cuts in trade on Monday and have fallen almost 2% on the back of second quarter earnings, where the lender reported the weakest profit growth since September 2020.

The stock is currently trading at Rs 1,409, which compares to Friday's closing price of Rs 1,436. The stock has risen 10% over a year-to-date period and over 11% in the last 12 months.

The dip in ICICI Bank share price comes despite the lender reporting an overall strong quarter, with asset quality, in particular, remaining robust.

Net profit rose 5% on a year-on-year basis to Rs 12,359 crore while net interest income increased 7% to Rs 21,529 crore from Rs 20,048 crore in the same period last year.

At 5.2% year-on-year growth, this was the weakest year-on-year growth for net profit since the September quarter of fiscal 2020.

• Net profit up 5.2% to Rs 12,359 crore versus Rs 11,746 crore (year-on-year)

• Net interest income rises 7% 21,529 crore versus Rs 20,048 crore (year-on-year)

• Gross NPA ratio at 1.58% vs 1.67% (quarter-on-quarter)

• Net NPA ratio at 0.39% vs 0.41% (quarter-on-quarter)

While analysts have noted that the September quarter is an inflexion point for banks, and improvement is expected starting in December, ICICI Bank has underperformed its peer HDFC Bank on several key metrics, including profit growth, with HDFC Bank logging an 11% growth.

The company's net interest margin fell four basis points to 4.30% for the September quarter compared to the previous three months' 4.34%.

ICICI Bank shares are currently trading at a relative strength index of 74, which suggests that the stock might be in an overbought territory.